U.S. National Debt Surpasses $40 Trillion for First Time

The U.S. Treasury Department confirmed this week what economic forecasters have been worried about for months. The total U.S. debt has eclipsed $40 trillion for the first time, raising concerns that a fiscal crisis is imminent. Read on for a deep dive into the numbers and why it is concerning.

Government Debt Has More Than Doubled in Last Decade

The latest daily cash and debt balances report from the Treasury shows public debt at $40.047 trillion as of August 18. This figure breaks down to $32.266 trillion of Treasury securities held by the public, as well as intra-governmental debt holdings of $7.782 trillion. Economic experts are understandably worried that increasing costs for the nation's social safety-net programs and interest payments are exceeding revenues that have slipped due to widespread tax cuts.

The overall government debt has more than doubled in the last 10 years. For context, the debt was sitting at $19.95 trillion when President Donald Trump first took office in January 2017. Approximately one-third of the increase came as the government borrowed money to fund the response to the COVID-19 pandemic under both Trump and former President Joe Biden. The increase in discretionary spending has also contributed to the rising debt, particularly in defense budgeting.

The news that the debt surpassed the $40 trillion mark was not a surprise to economic experts who have been monitoring the situation. Watchdog groups have issued warnings that lawmakers are not doing enough to address the dire fiscal outlook by cutting spending or raising taxes.

According to Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, "Forty trillion dollars of debt doesn’t exist solely on the government’s ledgers; it is felt throughout the economy and finds its way to the pocketbooks of people one way or another." MacGuineas went on to say that "The more we borrow, the more we exacerbate inflation, squeeze out other priorities in the budget, and leave ourselves vulnerable to emergencies at home and turmoil abroad."

The Treasury Department reported the fourth-highest monthly deficit in American history last week, coming in at $432 billion for the month of July alone. The gap was blamed on growing needs to pay out Social Security and Medicare benefits and tariff refunds taking away from customs receipts. The deficit over the first 10 months of fiscal year 2026 has already eclipsed the gap notched for all of fiscal year 2025, with two months still to go before the final totals come in.

Both Parties to Blame for Skyrocketing Debt

Both political parties share the blame for the skyrocketing debt. About 80% of the tax cuts and other budgeting decisions have been supported by both Democrats and Republicans in Congress.

While both parties shoulder the responsibility of the financial crisis, President Trump has been uncharacteristically silent on the issue. Rather than paying heed to a few remaining fiscal hawks in his party's leadership, Trump has advocated for heavy spending over both of his terms in the Oval Office. Public debt jumped by $7.8 trillion during the first Trump administration. Understandably, more than half of this debt was accumulated over the last nine months of the term as part of the COVID-19 response.

However, Trump cannot blame a global pandemic on rising debt during his current term. The U.S. debt burden has increased by $3.8 trillion since taking office again in January 2025. This puts the total growth of the debt under both Trump terms at $11.6 trillion and rising.

In comparison, public debt increased by $8.4 trillion under the leadership of the Biden team. A good deal of this debt accrued was also the result of heavy pandemic recovery spending. The Biden administration also ran up the debt by investing money in clean energy and infrastructure improvement.

A recent report from the Committee for a Responsible Federal Budget estimates that the fiscal decisions of both Trump and Biden have sent the federal debt trajectory higher than what would have transpired if the existing spending statutes had been followed. For example, Trump's controversial One Big Beautiful Bill Act is projected to tack on another $4.7 trillion in debt to the budget, according to estimates from the nonpartisan Congressional Budget Office (CBO).

The irony is that Trump has marketed his second term as a time of reducing the budget. This played out in the early weeks of the term when he created the Department of Government Efficiency (DOGE) to cut costs and reduce federal agency job bloat. The problem is that most of these spending cuts have been levied on discretionary spending, a bucket that accounts for the smallest portion of the overall budget.

Where is the Money Going?

The bulk of the nation's spending is budgeted for mandatory programs that account for approximately $7 trillion each year. Examples of mandatory programs include Medicare, Medicaid, Social Security, and veterans' care.

Roughly $1.1 trillion is earmarked annually to pay the interest on U.S. borrowing. Like any debt, this cost increases as interest rates climb and the debt load balloons. 2025 marked the first time that the costs to service the debts exceeded the budget for the Pentagon. Likewise, the first 10 months of the 2026 fiscal year have seen these interest costs exceed Medicare health costs. As such, the interest costs are now the second-largest line-item in the budget, coming in behind Social Security outlays.

Unfortunately, the news is likely to get worse on this front. The U.S. is now having to put more money into retirement and health care costs each year as the Baby Boomers reach these milestones. This increased funding is putting a strain on the trust funds of the Medicare and Social Security programs just as income tax revenues fall.

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